The RegTech industry is responding to the urgent need for transparency and flexibility in regulatory practices.
FREMONT, CA: With less certainty and more complexity in regulatory systems, efficiency, accountability, and collaboration has never been more important. Agile governance has gained prominence in global regulatory efforts due to new technologies, tools, innovative partnership models, and more.
Regulatory technology (RegTech) is harnessing the power of technology to create the best possible regulatory outcomes for society as a broader culture of innovation sweeps across business, culture, and society - a market estimated at USD 7.6 billion in 2021 and USD 19.5 billion by 2026.
Focus areas: Studies find that three common success factors can accelerate the advancement of agile, data-driven regulatory solutions that meet the moment in 2022 and beyond - spaces where stakeholders connected to regulation must invest their time and intention. Regions must be aware of and embrace new engagement models to accelerate innovation and agility in regulatory processes and outcomes. The public and private sectors must redesign how they engage around regulatory matters, shifting from a consumer and producer dynamic to one that emphasizes partnerships, co-learning, and multi-stakeholder engagement.
As the regulation process, much like capitalism at large, requires a stakeholder-led approach - taking into account the needs of consumers, employees, local communities, shareholders, and suppliers who fuel global supply chains - collaboration is the key to a more innovative, RegTech-driven future, and this extends beyond government and the private sector.
Data-driven decisions: Regulators can align regulation development with agile, iterative processes similar to those used to develop new software by adopting radical user-centricity. This means embracing a dynamic approach that welcomes experimentation and iteration. As new applications and platforms are developed, human regulators can consume greater volumes of data and make more informed decisions. Regulatory platforms are powerful because they transform regulation into digital logic, codifiable regulation, access to technology developers, and are overseen by government regulators.
Regulators: A government leader should convene academia and industry experts, including technology and domain experts, to discuss how technology can connect with reporting, auditing, and compliance management processes. To accelerate the adoption of digitalization, governments should examine the best practices in tech ethics applied to regulatory technologies and prepare a report about how digitalization yields benefits beyond compliance. An experimental, user-centered, outcome-specific approach to RegTech needs to be adopted by regulators. By using regulatory sandboxes and pilot programs, regulators can gain a deeper understanding of different approaches to these technologies, especially artificial intelligence, to choose solutions that are transparent, robust, and fair from the start.
